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Real estate recovery is for real, but it'll take 4-5 years for values to hit old high-water mark

By DAVE SOLOMONNew Hampshire Union Leader

MANCHESTER — Sales are up, prices are recovering, foreclosures are declining and buyers are coming back.

There are many good signs for the housing market in New Hampshire.

But if you’re waiting for the value of your home to return to the high-water mark of 2005-2006, be prepared to wait another four to five years, according to Bill Weidacher, Realtor and president of the New Hampshire Realtors Association.

Single-family homes in New Hampshire lost as much as 30 percent of their value over the course of the recession, and the climb out of that hole is going to be slow but steady, Weidacher said at a panel discussion hosted by the N.H. Business and Industry Association on Thursday at the Center of New Hampshire titled, “Are We Back In Business? Housing in New Hampshire after the Great Recession.”

Joining Weidacher in the discussion were Kendall Buck, executive vice president of the N.H. Home Builders and Remodelers Association; Chris Davies, a developer with Great Bridge Properties; and Ignatius MacLellan, managing director of home ownership with the New Hampshire Housing Finance Authority.

Weidacher reminded the audience of the recessions in the early 1980s and 1990s, but said the Great Recession was exceptional in its impact on real estate. “Residential real estate, from my perspective, got hit the hardest I’ve ever seen,” he said.

Sales volume has fully recovered, with 1,587 single-family homes sold in June, the largest number of sales since September 2005 at the peak of the last housing boom. July’s 1,637 residential sales was the most sales in a single month since August 2005.

“Appreciation is also starting to looking very meaningful,” said Weidacher, but prices are not recovering nearly as fast as sales volume. The median New Hampshire sale price for a single-family home in July was $230,000, a big improvement from the median price of $207,900 in July 2012, but still a long way from the peak median sale price of $270,000 recorded in June of 2005.

Weidacher predicted that a 6.5 percent annual appreciation rate for the past year would taper off to 4 or 5 percent per year in the next two to three years, as much of the pent-up demand has been satisfied.

“We are digging our way out,” he said. “A lot of consumers who’ve been on the sidelines have decided now is the time. But I think the process to get back to the high-water mark is going to be very slow. It could be 2017-2018. Until we get back there, I don’t see us being able to say we’ve fully recovered.”

Buck, representing builders and remodelers, agreed that the recovery is under way, but it is quite modest by historic standards, especially when it comes to new housing starts. “We are still at a very low point, but the good news is that it’s headed in the right direction,” he said.

The number of foreclosed or distressed properties remains high and continues to put downward pressure on prices. MacLellan from the Housing Finance Authority pointed out that 4,000 New Hampshire homes were in foreclosure in 2010, compared to 3,000 in the past year.

“That’s good news compared to 4,000,” he said, “but not so good compared to 500 per year before the recession.”

Interest rates are likely to be volatile, he said, as the Federal Reserve begins to cut back on bond purchases designed to stimulate the economy. “The bottom has been reached (on interest rates),” MacLellan said. “There’s no way we’re going back to three and a quarter percent.”

Despite the price decline, affordable housing remains a problem for the state, according to Davies, whose company specializes in that sector. “There are communities willing to work with developers like us,” he said, “but there are many who are not.”